Microsoft announced the UK prices for Microsoft Office 2010 this morning and, like the US prices unveiled last month, they're down. (For details, see: Microsoft Office 2010 priced from free.) There are plenty of reasons for this, though it's hard to know which have been most influential. The main ones may be the arrival of online office suites and competition from Open Office, both of which are free. Limited as they are, they must reduce the perceived value of Office, to some extent.

But there has also been the huge success of the cheap Home and Student version, which you can install on three PCs. At Christmas, this was one of Amazon.com's top three best-sellers. Indeed, Microsoft says Office has been the top selling PC software product, including games, at US retail for the past seven years.

That success has led to the launch of the Office Home and Business version at £239.99, which might have the same effect. That is, it could encourage more Office users to pay a reasonable price for a proper copy, rather than use a pirate version. And, to be frank, if you reckon you can't afford to pay roughly £1 a week (assuming the usual Amazon discount) for five top class programs then you're not being entirely honest with yourself.

Another factor is the prospect of a reduction in the cost of packaging and distribution. Microsoft Office buyers have traditionally bought a box containing a bunch of discs and some paperwork. (I seem to recall that my full version of Office 2003 came on about a dozen CDs.) In the future, many copies of Office will be preinstalled on new PCs and unlocked using a key card, or downloaded instead.

One catch is that if you unlock a pre-installed version, it only works on that PC. If you pay a bit extra for a boxed copy, you can install it on both your desktop and your laptop, and you already have a back-up copy.

Another catch is that there are no longer any upgrade versions of Office 2010. In other words, the fact that already own a copy doesn't give you a reduced price on the new version. This may also mean Microsoft's price cuts are smaller than they look.

Finally, there are always people who complain that Office has too many features and that they don't want to pay for it anyway. For them, Microsoft is introducing a Starter version of Office, possibly ad-supported, which will be shipped free with PCs from some manufacturers. Starter strips out most of the advanced features, though it will actually display documents that it lacks the functionality to edit.

Starter replaces Microsoft Works and has the advantage that users will be able to read and write files in Word and Excel without downloading a free viewer. It will also provide Microsoft with the chance to sell people upgrades when they find out that they actually need features they thought were superfluous.

Microsoft reckons that 250 million people already use Microsoft Office at home, but that could be less than half of the Windows home user base. It's clearly to Microsoft's long term advantage for more users to have their data in Microsoft file formats, so it makes sense to distribute Office widely to encourage their use*. Eventually, Google Docs should improve its ability to handle these file formats, but as long as Google Docs is rubbish at it -- and as long as internet connections are slow or non-existent over much of the globe -- there should still be a decent market for a suite with Office's power, performance and ease of use.